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Thursday, Feb. 21, 2002
NOT JUST MARKET SHARE ANYMORE
Japanese companies begin to build their brands
In October 1999, Nissan Motor Co. chief Carlos Ghosn said he planned to boost Nissan's brand power as part of a turnaround plan for the then ailing automaker. Many Nissan workers were initially confused.
"When I first heard those words, I thought we were just going to have a new tag line or a slogan," said Rintaro Kumasaka, manager of the firm's internal communications group.
Kumasaka soon realized, however, that boosting the company's brand power -- the loyalty consumers have to a specific brand -- would be essential in prioritizing profitability over market share; consumers would not mind paying a premium price for a top brand.
Nissan was one of many Japanese firms that lacked a strategy in terms of the visual presentation of its brand and neglected the importance of brand image, according to experts.
Partly inspired by Western practices, more and more Japanese companies are beginning to consider their brand as more than just a name, seeing it as an intangible asset that can differentiate them from rivals in the global market.
To enhance the value of their brands, many firms are taking more care over how their logos are used and are improving services or products associated with their brands.
"Our dealers were disappointed when they heard customers saying Nissan would give a bigger discount than competitors," Kumasaka said. "But it was true that we could increase our market share if we sold cars cheaper.
To boost profitability, Nissan needed to sell cars without big discounts, he said, adding, "For the first time ever, this was clearly decided at the management level."
Nissan needed to present its customers with a vision of what it wanted to be, according to Kumasaka.
Under its brand-building strategy, Nissan set its core values for innovation and made sure all its employees understood them.
While Nissan does not publicize its core values, they have reportedly inspired a recent series of car designs and features that have been praised for their innovation.
The silhouettes of many new models have sharper angles, and the firm also dared to change the design of the tail lamp of the Skyline, a top-selling model whose unique tail lamps were long considered a trademark.
Nissan was also ahead of the competition in launching a gasoline-powered car with low carbon dioxide emissions.
And it has been aggressively launching new telematics services -- navigation and road side information, for instance.
As part of its branding effort, Nissan redesigned its logo and set guidelines on how it should be presented -- in terms of size, font and color -- on its vehicles, letterheads, business cards, brochures and in advertisements.
"The employees came to understand that brand was not just a tool for marketing, but connotes something that we all need to share," Kumasaka said.
Shinsei Bank, formerly Long-Term Credit Bank of Japan, offers another example of a hobbled Japanese company that turned to branding in overhauling its operations.
Shinsei, the first Japanese bank funded mainly by foreign shareholders, including Ripplewood Holding Management LLC of the U.S., was reborn in March 2000 after LTCB collapsed and was nationalized in 1998.
Shinsei, which actually means "new birth," needed to escape its negative image in order to attract new customers and boost its profitability. And to accomplish this, the bank needed to offer better services, according to spokesman Eiji Otaka.
Unlike most other banks, which close at 3 p.m., Shinsei outlets are open until 7 p.m.
Its automated teller machines also do not charge withdrawal fees at night or on weekends and operate around the clock. It has also established small booths within its outlets to provide customers with a more private atmosphere when conducting transactions.
Shinsei has also invited Starbucks Coffee and Yahoo Cafe to open outlets on its premises in an effort to attract more customers.
"What we provide to our customers and how they feel by experiencing our services shapes our brand," Okita remarked.
Nikko Cordial Securities Inc., formerly known as Nikko Securities Co., has tried to refresh its brand image through a name change and advertising campaign.
In June 2000, the major brokerage launched a brand management division. It renamed itself last October, when it set up the holding company Nikko Cordial Corp.
The company's Japanese name is Nikko Cordial Shoken, with "cordial" spelled out in katakana without translation.
"It's an unfamiliar word and also sounds new to the Japanese," said Yuji Minami, general manager of the brand management division. "It's also our brand statement and what we promise to be to our customers."
The company joined a capital tieup with U.S. financial giant Citicorp in 1998 and has been restructuring since March 1999, when the new strategy was conceptualized.
"It's important to distinguish ourselves from our competitors in the industry," said Minami, noting that consumers traditionally have a uniform perception of local securities firms.
The company, having previously kept advertising to a minimum, launched an aggressive ad campaign to promote its new corporate structure, name and logo, using Seattle Mariners outfielder Ichiro Suzuki as its pitchman.
The bold spirit of Ichiro -- a Japanese baseball star who last year ventured into the U.S. major leagues and was named the most valuable player in the American League -- represents the firm's vision of the future, Minami said.
Minami's team has been responsible for running the ad campaign and setting and managing guidelines for the logo.
While some Japanese firms have only recently embraced brand management, the practice has been a bigger part of corporate culture in the U.S. and Europe.
The recent birth of business consultancy Accenture Corp., which was founded in the U.S. and operates globally, shows the importance that some multinationals place on branding.
When the firm changed its name from Andersen Consulting on the first business day of 2001, everything that carried the original name or logo was simultaneously replaced under the same rules, according to Akira Nakazawa of the marketing and communications department at the firm's Tokyo office.
This was done worldwide.
The firm was forced to change its name following a legal battle with Arthur Andersen, an affiliated accounting firm. The name was coined to connote "putting an accent on the future."
Accenture's brand strategy is managed by the Accenture Global Brand Team in Chicago. The firm also has a Web site that shows examples of how the signature, color and images of the logo should be presented.
It also has a "brand hotline" call center that answers brand-related questions from its offices around the world.
"We want our target customers to recognize our brand at a glance," Nakazawa said, "and hold the same image toward the brand wherever they are in the world."
Japanese firms lag four or five years behind their competitors in the U.S. and Europe in terms of brand strategies -- both philosophically and visually -- according to Ryoji Itoh, managing director of Bain & Company Japan Inc., the Japanese unit of a U.S. business consulting firm.
Until recently, most Japanese firms did not recognize the importance of intangible corporate assets, including brand image, he said.
But as the market matures and growth from capital investment becomes more elusive, effectively wielding brand image has become a vital part of surviving global competition, he said.
Itoh also pointed out that many Japanese firms began disclosing earnings reports on a consolidated basis -- a method adopted earlier by many Western firms -- during the late 1990s.
In order to show the unity of a business group in terms of its stockholders and employees, firms have been strengthening common values to help boost their brand image, he explained.
Traditionally, Japanese firms only had to look good on a parent-only basis, he said.
Now they're having to look good in the customer's mind.
Hotaka Katahira, a professor of economics at Tokyo University, said management leadership is crucial in establishing a strong brand.
"Brand is a very delicate thing," he said, "like glass."